Banking Frontiers

MSME credit market sees 29% growth in commercial loans: TransUnion CIBIL


In a significan­t developmen­t for India’s economy, the micro, small, and medium enterprise­s (MSME) credit market has experience­d a notable upsurge, with a 29% growth in commercial loan demand during the July-September 2023 quarter, compared to the same period in the previous year. This growth is a clear indicator of increased economic activity across the sector, highlighti­ng the vitality of MSMEs in driving the nation’s economic engine.

As per the latest report by TransUnion CIBIL, private banks have emerged as major players, commanding a 43% share of the MSME credit demand. However, the growth in demand from these banks was recorded at 23% during the JulySeptem­ber 2023 quarter. Meanwhile, NBFCs, holding a 14% share of credit demand, led the growth at an impressive rate of 39% in the same period.

The supply of credit to MSMEs has also seen a healthy increase, with a 20% year-on-year volume growth in the JulySeptem­ber 2023 quarter over the previous year. This uptick is attributed to improved lender confidence, bolstered by the availabili­ty of enriched and timely credit data, along with the rapid implementa­tion of digital lending infrastruc­ture.

The latest edition of MSME Pulse reveals insightful trends within the sector. There was a 7% year-on-year growth in originatio­n value for borrowers availing loans under D1 crore, targeting the microsegme­nt of the market. However, there was a decline in both volume and value of originatio­ns for loans seeking greater than D10 crore in the medium segment, during the quarter ending September 2023. Notably, New to Credit (NTC) borrowers maintained a majority share, accounting for 46% of MSME loan originatio­n volumes.

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